Credit and interest rate – Next frontier for crypto

Key takeaways

  • Interest rate and credit markets could be the last piece of the puzzle to complete the whole cryptocurrency ecosystem.
  • Interest rate derivatives could be the next frontier for the crypto industry, especially for exchanges.
  • Staking yields could be one of the metrics to measure the risk and volatility of a specific token.

Overview

Crypto lending and staking have been getting more market attention these days. Thanks to the rapid growth of DeFi and the product innovation from crypto exchanges and wallets, more crypto market participants are now able to diversify their portfolio with such products or earn passive income by staking, saving, and lending.

This segment of the crypto space may still be green and in its early stage of wider adoption. Yet, ultimately, this sector could evolve into one of the most critical parts of the broader crypto space and provide some vital information to the markets, and that is interest rates.

Market participants may able to give a more precise valuation and assessment for coins and tokens based on their interest rates, similar to what we have been doing in the traditional markets. Interest rates of a company or a country is a vital indicator of its financial health.

Product developers may also be able to build new derivative products based on interest rates, such as options of EOS’s staking rate, or interest rate swap like what has been commonly trading in the fixed income markets.

This article will explore the initial stage of the crypto interest rate space, and what this sub-sector of the broader cryptocurrency space could tell us. Also, we will envision how a matured interest rate markets in crypto could shape the future of trading.

The yield of crypto staking

The concept of earning interest with cryptocurrency did not take off until recent years, and staking is one of the ways to make interest and could generate extra income for investors. 2019 was a robust year for staking,…

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